Yes this is one of the main concern and applies to whole sector perhaps. Looks like only growth we can factor is be basically growth from existing GAs and not new GA expansion.
Agree with other points – thanks, will take a deeper look at subsidiaries too.
Good Q1 numbers, but few red flags from their recent annual report –
The auditors draw attention to Note 39 in the financial statements, which discusses the restatement of prior period errors
The auditors referenced a disclaimer in Annexure C that may have an adverse effect on the functioning of the company.
The company’s accounting software had an audit trail (edit log) feature, but it was not enabled throughout the year for certain transactions at the application level. Additionally, the audit trail feature was not enabled at the database level to log any direct data changes
During the year the Company has been sanctioned working capital limits in excess of ` 5 crores in aggregate from Banks on the basis of security of current assets and immovable fixed assets. Based on the records examined by us in the normal course of audit of the financial statements, quarterly returns filed with such Banks are not in agreement with the books of accounts of the Company
According to the information and explanation given to us, the Company has not formalized and documented its internal financial control with reference to financial statements on criteria based on or considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (“Guidance Note”) issued by the Institute of Chartered Accountants of India (“ICAI”). Consequently, we are unable to obtain sufficient appropriate audit evidence to provide a basis for our opinion on whether the Company had adequate internal financial controls with reference to financial statements and whether such internal finaancial controls were operating effectively as at March 31, 2024.
The Company has accounted for material prior period errors discovered during the current period, retrospectively by restating the comparative amounts to which the same relate, due to this their last year profit came down from 331cr to 268cr and eps came down from 12 to 9.76
Recently management said – The company is in the process of formalizing internal financial controls to improve business operations. These controls will ensure better systems for safeguarding assets and business continuity. An ERP system has already been implemented to improve transparency and operational visibility.
Disclosure – Invested
Thanks, I agree with your thesis
Some points I want to add based on my research
Trichy & Namakkal was the most hotly contested GA in the 11th round. It had the maximum number of bidders at 13, and IRM managed to edge out some heavy weights like Adani Total
I feel the subsidiaries also have a long runway (you can read more about them in the Industry report I shared above)
One piece I worry about is that fact that PNGRB has distributed almost 100% of the GAs…only islands are left. So once these 4 GAs that IRM has mature then where will the next leg of growth come from (there will likely be industry consolidation at that point)
Maheswar Sahu leaving at this point is not a problem I feel – the biggest value that he could have added was getting licenses to operate GAs…so he has done his job (as there are no GAs left on the table)
Enertech Distribution has 21% share in the company – one of the directors (and I guess shareholder) in this company is someone named Shilpa Sahu. I will not be surprised if she is related to Maheswar Sahu. So in an indirect way Maheshwar Sahu will have his skin in the game (I’m just connecting the dots)
If you track the sales of EV vs CNG cars, the latter are doing better in terms of sales…so the anti thesis that EV is going to kill CNG doesn’t hold water
Disc.: invested
Not sure if the lifetime maintenance cost shown here depicts reality. It could be much higher. Also, is the cost of battery replacement considered? apologies, I havent read the report.
Also, common man should factor in higher GST on EV going forward.
Once No. of EV cars sold out per quarter starts going up, there is high possibility that, all current concessions such as Low GST, Low Road Tax would be removed or rationalized to higher levels.
By the time, most of us are willing to buy EV car, most of these tax waivers would have been reduced, so actual practical calculations would be quite different.
Having said this, it is clear that, even after higher taxes, EV would be better and less costly option in the long term, provided basic charging infrastructure is in place and Electricity charges are not hiked by the Authorities.
There is tendency in certain nations to increase taxes on those things which start becoming popular, so one must factor such things in all future calculations !!!
New additions:
Disclaimer: I am not a SEBI registered advisor or analyst. This is my personal view and not a recommendation. I am often wrong and do change my views without being able to inform anyone. Please consult your financial advisor.
Their last quarter has been terrible. Dips are opportunities!
The promoter has not reduced the stake. The change in the holding and equity dilution is because of the right shares which were issued in February 2024.
Total Vehicle Cost Analysis
[1711106202_Alternative Fuel
Source Care edge report dated 22march 2024 link below
1711106202_Alternative Fuel Vehicles_CareEdge Ratings.pdf (317.1 KB)
Currently On one side, we have Union Heavy Industries Minister H.D. Kumaraswamy saying that FAME III is on the way. He recently mentioned that the government could finalize the third phase of the FAME scheme in the next month or two. An inter-ministerial group is apparently working on it, addressing issues from the earlier phases.
On the other side, we have Union Road Transport Minister Nitin Gadkari, who suggests that EV subsidies might be coming to an end. He believes that with increasing demand and production, costs are dropping, which could reduce the need for government support.
Gadkari also highlighted that the GST on electric vehicles is just 5%, compared to 28% for petrol and diesel vehicles, which he sees as a major advantage for EVs.
It seems like there’s an ongoing debate about the future of India’s EV policy. While Kumaraswamy’s comments suggest that government support is still needed, Gadkari believes the industry is ready to stand on its own.
This uncertainty is causing some worry in the EV industry, especially with the festive season around the corner. October is a huge month for vehicle sales in India, with Navratri and Diwali both taking place. EV manufacturers are concerned that if EMPS ends and FAME III isn’t ready, there might be a gap in subsidies.
Some industry players are calling for either an extension of EMPS or a quick rollout of FAME III to keep the momentum going.
However, Gadkari remains optimistic. He’s confident that India can become a global hub for EV manufacturing, with support from initiatives like the Production Linked Incentive (PLI) scheme, which aims to boost local production.
The government’s next move will be crucial in shaping the industry’s future.
I have seen similar issues. Google Finance plays truant sometimes.
Recently, I have shifted the fetch code as BOM:543635 and it works.